Commerce Accountancy

Accounting Principles and Practice

1,227 Questions

Accounting principles and practice questions cover core concepts like assets, depreciation, financial statements, and ledger adjustments. These topics are essential for commerce students preparing for academic and competitive exams. Regular practice ensures a strong grasp of standard accounting standards and business operations.

Asset depreciationFinancial statement adjustmentsAccounting standardsSingle entry systemCapital expenditure

Accounting Principles and Practice Questions

Multiple choice organisation of commerce and management sources of business finance - 2 equity and preference shares equity shares and preference shares non-institutional sources - long-term

Retained earnings is a source of ___________.

  1. Internal financing

  2. Ploughing back of profits

  3. Self financing

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Retained earnings are the funds which have been kept by the company for their future expenses out of the net earnings gained by the company over the course of business. These retained earnings can be a source of funds for internal financing, as a help in the low business turnover or self financing for the smooth functioning of the business or company.

Multiple choice book keeping and accountancy accounts of 'not for profit' concerns financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations receipts and payments receipts and payments account

Any donation received for a specific purpose is a ___________.

  1. Liability

  2. Assets

  3. Revenue Receipts

  4. Capital Receipts
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

If donation is received without a specific purpose, it is a revenue receipt. But if donation is received for a specific purpose, this is considered as capital receipts and all expenses incurred towards the specific purpose should be set off from this receipt.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) types of issue of debentures types of debentures meaning and kinds of debentures

Debentures which are not secured by any charge upon any assets of the company are called __________.

  1. secured debenture

  2. naked debenture

  3. bearer debenture

  4. floating debenture
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Naked debentures, also known as unsecured debentures, are those that do not carry any charge or security on the assets of the company.

Multiple choice adjustment of partners capital and death of a partner retirement/ death of a partner elements of accounts

On the dissolution of a firm, an amount realized from the unrecorded asset is credited to:

  1. Revaluation account

  2. Realisation account

  3. Cash account

  4. Capital Account.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

At the time of dissolution, all the assets are transferred to realisation account. Journal entry is:
Realisation A/c Dr. 
    To assets A/c 
When assets are sold, entry is:   
Bank A/c Dr. 
    To Realisation A/c
Because bank balance increased.

Multiple choice adjustment of partners capital and death of a partner retirement/ death of a partner elements of accounts

Cash paid on settlement of retiring partners claim is credited to _____.

  1. Cash A/c

  2. Partners Capital A/c

  3. Retiring Partner Capital A/c

  4. None of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Cash is a real account. Rule for the real account is as under:

Debit what comes in 
Credit what goes out

Cash paid to partner at the time of retirement. Accordingly journal entry will be passed as:
Partner's Capital A/c                 Dr.
          To Cash A/c

Multiple choice adjustment of partners capital and death of a partner retirement/ death of a partner elements of accounts

The deceased partner's capital account is debited with his share of the following amounts:

  1. Drawings

  2. Interest on drawings from the beginning of the year to the date of death

  3. Loss on revaluation of assets and liabilities

  4. All of these
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The partner's capital account is an equity account in the accounting records of a partnership. It contains the following type of transactions:

1. Initial and subsequent contributions by the partners to the partnership, in the form of either cash or the market value of other types of assets.

2. Profits and losses earned by the business, and allocate to partners based on the provisions of the partnership agreement.

3. Distributions to partners.

Following are the things which are debited to deceased partner's capital account with his share:

1. Drawings

2. Interest in drawings from the beginning of the year to the date of his death.  

3. Loss on revaluation of assets and liabilities.

Multiple choice adjustment of partners capital and death of a partner retirement/ death of a partner elements of accounts

At the time of final payment to retiring partner, which of the following adjustment/s is/are necessary in the capital accounts ?

  1. Transfer of goodwill

  2. Transfer of profit or loss on revaluation

  3. Transfer of reserve

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The following adjustments are necessary at the time of final payment to retiring partner:

1. Transfer of reserves

2. Transfer of goodwill

3. Transfer of profit and loss on revaluation
After the adjustment of the above mentioned items, the capital account balance standing to the credit of the retiring partner represents amount to be paid to him.

The continuing partners may discharge the whole claim at the time of retirement. Then the journal entry will be as follows:

Retiring Partner's capital A/c                Dr.

             To Bank A/c

Sometimes the retiring partner agrees to retain some portion of his claim in the partnership as loan. The journal entry will be as follows:

 Retiring Partner's Capital A/c              Dr.

               To Retiring Partner's Loan A/c

               To Bank A/c

Multiple choice adjustment of partners capital and death of a partner retirement/ death of a partner elements of accounts

On retirement or death of a partner the existing profit and loss a/c and Reserve a/c is transferred to ____________.

  1. debt side of all partners capital a/c

  2. credit side of all partners capital a/c

  3. debit side of remaining partners capital a/c

  4. credit side of remaining partnership capital a/c
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
At the time of retirement of a partner, if there exist any reserve or accumulated profit in the books of the firm, they should be transferred to the old partner's capital/current accounts in the old profit sharing ratio, because these items belongs to the old partners.
In the same manner, old partner's capital/current accounts should be debited in the old ratio if any accumulated loss appears in the asset side of the balance sheet.
Multiple choice adjustment of partners capital and death of a partner retirement/ death of a partner elements of accounts

In normal trading circumstances, which of the following would not be found in a partner's capital accounts? 

  1. Profits on revaluation.

  2. Losses on dissolution.

  3. Goodwill

  4. Drawings.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Drawings are typically recorded in a separate drawings account or as a debit to the capital account, but in the context of partnership dissolution or revaluation, the other items listed are standard adjustments to the capital account balance.

Multiple choice adjustment of partners capital and death of a partner retirement/ death of a partner elements of accounts

____________ A/c is debited when amount of capital is to be brought in by the partner.

  1. Partners' capital

  2. Partners' current

  3. Cash/bank

  4. None of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
New partner is admitted either for increasing the partnership capital or strenghthening the management of the firm. When a new partner joins he is required to bring his share of capital and goodwill.
When partner bring his share of capital and goodwill cash/bank A/c is debited.
Multiple choice book keeping and accountancy accounts of 'not for profit' concerns receipts and payments receipts and payments account prepration of income and expenditure account prepration of income and expenditure account and balance sheet

________is/are example(s) of capital receipts.

  1. Sale proceed of fixed asset

  2. Loan raised from financial institutions

  3. Capital raised through book building process

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

b'Option D is correct. Capital receipts refer to those receipts which either create a liability or cause a reduction in the assets of the firm. They are non-recurring or non-routine in nature. Sale proceeds of fixed assets leads to reduction in assets. Loan and Capital raised create liability for firm. All are capital receipts. '

Multiple choice accountancy accounting using data base management system (dbms) applications of dbms in generating accounting information accounting and database management system accounting and database system

Which of the following is the example of intangible fixed assets?

  1. Land

  2. Patents

  3. Furniture

  4. Machinery
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Intangible assets are assets that lack physical substance. Patents are legal rights that provide value but cannot be touched, unlike land, furniture, or machinery.

Multiple choice accountancy accounting using data base management system (dbms) applications of dbms in generating accounting information accounting and database management system accounting and database system

__________ may be classified into shares and debentures which may be further classified into quoted and unquoted.

  1. Current Assets

  2. Intangible Assets

  3. Tangible Assets

  4. Investments
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Investments are financial assets that can be held in the form of shares or debentures, which are often traded on markets as quoted or unquoted securities.

Multiple choice accountancy accounting using data base management system (dbms) applications of dbms in generating accounting information accounting and database management system accounting and database system

Non operating income means income from activity which is incidental to income from opearating activity.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Non-operating income is derived from activities that are not part of the core operations of the business, such as interest income or gains from the sale of assets.

Multiple choice book keeping and accountancy origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

Wages paid for erection of machinery are debited to ____________.

  1. Wages Account

  2. Machinery Account

  3. Profit and Loss Account

  4. Deferred Wages Account
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

All incidental charges incurred for installation of assets are charged to the cost of that asset. Wages paid on erection of machinery is a capital expenditure and will be debited to machinery account.